Yes Lincs, as I was researching and writing the post it did occur to me that the savings would be a poultry amount compared to the deficit. However, I don’t think the services you mentioned would not run into the kind of expenditure you mentioned in your 0.6% of funding gained for overseas wars and space exploration (although I consider NASA a good cause for the future of mankind and womankind of course) So I believe that savings could be made without it being reflected in cuts to services. On this occasion I will leave the details to Elon, but he knows where to find me if necessary…
@Bruce that is fascinating, it strikes me that trying to pay off a trillion will never be possible by any government. What I want to know is: Who/or what financial establishment were stupid enough to lend them that amount of money in the first place? And what would be the consequences if a country just wrote off the debt? Are national debts just a way of blackmailing the residents of that country?
I don’t.
Expenditure is about $6.75 trillion a year. If success is to make expenditure the same as revenues then the US government would need to cut spend by something $1.8 trillion a year. They could increase revenue (hike up taxes) but there is no hint of that.
This means cutting at least 25% off the expenditure. I find US government versus state versus mandatory / discretionary spending plans quite opaque. But there’s a couple of big spends that will not change - interest payments on national debt (that’s staying high for some time) and defense (the military-industrial sector and the republican party won’t let this slip). These two add up to 32% of the total expenditure. Add in veteran benefits and that’s 37%.
So you’ve now only got social security (21% of total), medicare (13%) and health (15%) as sizeable elements to find $1.8 trillion of savings. In practical terms, you are more likely to achieve that level of savings by cutting these three costs - they are half the total budget.
The only other ones to go at for savings (education, income security, transport, argiculture, etc.) all add up to 15% of the budget. So you could can the whole lot completely (literally, stop all state education for example) and you would still need to find $800bn of savings. It ain’t enough, even if it was deemed to be acceptable.
So, the top three budget elements (social security, health and medicare) need to be cut in half to achieve the target savings. Anything else is not realistic (stopping all state education), not enough (saving 50% of something that is 1% of the budget), not permittable (cutting interest payments, cutting defense) or not on the table (raising taxes).
Now explain how cutting social security, health and medicare in half is not the same as decimating services?
Obviously it won’t be done in one year Lincs, we have to look at the long term, but the first thing to do is to try and prevent the interest from stacking up each year.
When I was paying a mortgage back in the seventies and eighties, payments from January to November were just paying back interest. Decembers payment was the only one that reduced the mortgage. I would imagine it works similar to that in high finance, but I have no idea when we are talking silly amounts with more than four noughts…
I would like to like your logic. However, unless super-deep cuts are made to expenditure the only way to pay more back into the national debt is … wait for it … to borrow more!!
Or issue more government bonds - which was the way quantative easing was funded. But this greatly reduces the value of your currency, as I understand it. Or have inflation for a bit so that the actual value of the debt decreases. Or grow the economy so that debt versus GDP and per capita is less. Or tax more to gain the funds to pay back more.
The right wing approach has been cut spend and try to grow the GDP. Doesn’t seem to work.
A possible better approach is to tax more and to try to grow the economy (investment & incentives) but to use growth to increase average income. Cutting spending only reduces average income (more unemployed) which reduces tax revenues. Taxing the rich does not affect spend, not really, so does not hinder the growth of the economy. The right wing view of growth is higher GDP by more wealthy people and more wealthy companies (and suppressed wages for workers). That skewing and hoarding of wealth does not help anything (other than those with money).
Note - if super deep cuts are gentle and incremental then there will not really be any impact on debt within Trump’s tenure. He will expect fast and significant impact.
My conclusion - either Musk fails in this task and no impact on debt. Or Musk enables massive expenditure cuts with minor debt impact. But which will have a longer term impact of greater unemployment, more poverty, greater wealth divide and lower long term growth.
Thanks Lincs, sounds reasonable. So why don’t they make a token gesture to bringing down the debt, give people a life of milk and honey, a cheaper cost of living, plenty of jobs and pass the debt on to the next government in four years time. Isn’t that what labour did in 2010 ?
I am presuming you are speaking of non-military public services which are a fraction of the larger sectors. The threat of losing public services #1 in the left’s election economic playbook, but the voters didn’t buy it. While cutting services are inevitable regardless of the DOGE proposal. many of the spending areas of which you refer are enshrined and not discretionary.
What’s proposed, you ask? Shifting education spending and decision-making to the states, reduced foreign military aid, elimination of redundancy in places the Department of Education (possibly getting rid of it altogether), restructuring of others like the Department of Homeland Security, downsizing others, a massive reduction of the $155B spent on illegal immigration shifting those costs to Mexico and Central America (through reduced assistance and increased tariffs), audits that will yield reductions on badly negotiated military contracts, and across-the-board shifting services into the private sector that are more efficient and growth-producing. Indirectly, there will be recommendations on the reduction of unnecessary departments that execute needless regulatory restrictions in certain sectors.
. It’s absurd and fear-mongering to say that Republicans don’t want to support the truly needy. It is, however, a broad but true stroke to say that Republicans don’t want to “take care” of people in needless poverty but rather “lift them out of it” - which, exactly what happened under the last Republican administration’s policies (pandemic assistance aside). In fact, Republicans are the ones who have always advocated for private donation through tax deductions that were slashed by Democrats.
Spending abuse is massive and ubiquitous. For example, outsourcing manufacturing abroad (think the rust belt swing states) without realistic re-training and job placement, the federal government proactively incentivized millions hard-working people onto disability roles. It proved depressing and oppress these folks work and life goals by making them dependent on a government subsistence-level paycheck rather than getting them back into the workforce, which would benefit the entire nation. As an important aside, these hundreds of thousands to low millions of people are not counted in unemployment statistics.
More than anything else, the election showed that that working America - wants more work and they are not thrilled with how their tax dollars are being spent. They well-understand that they can’t have jobs if strong job sectors are weakened or disappear because of terrible trade policies. The silent voter came out in force to say that they want smaller government, fair trade, and less wasted government spending that will yield lower taxes and promote more growth of goods and services.
You can never deregulate any industry, you need government oversight. If you deregulate any industry you must immediately pass a law barring government from bailing them out, the major causes of economic downturns are poor Corporate decisions, practices, and policies. Every economic downturn we’ve ever had was due to poor Corporate decision making / policies, this is what happens when you elect a Corporate leader as President, Corporations are playing with “house money”, and tax payers will foot the bill. Do nothing Trump came n 2016 amidst a growing Obama economy and did absolutely nothing, but watch the nation go to pot while he played golf.
The delusion the GOP leaves it’s delusional followers are it’s policies are about the people, the GOP desire to put every facet of the economy in Corporate hands, kill outside competition, wages will decline, cost of everything will increase, Corporations will profit.
The NSW Government is in dispute with the rail union who threatened a two day strike. The union wants a 30% rise over three years and 24 hour running. The government has decided to allow the shut down of the railway from Thursday to Sunday on the principle, “That’ll learn 'em”.
The government said it could not agree to the union’s demand for 24-hour train services like it did last weekend.
“We’ve seen the transport minister come out three times in the last 24 hours, which is more times than the NSW government has negotiated with us,” RTBU NSW secretary Toby Warnes said.
it’s not debt but deficit that is the issue. The US along with other world nations is recovering from the Covid pandemic hit. The deficit is not expected to level out anytime soon. IMO this posturing is more political than economic. Divide and rule, unsettle, stir-up etc. But the expectation is that US debt and deficits will increase under Trump.
I would have thought that the reason Trump picked Musk to conduct a spending review is to get someone who does not understand “enshrined”. The aim is to have ideas that are very much in the tech sector mindset of move fast and break things. Think the unthinkable. I would not assume any spending is safe and secure.
Worse, your ideas don’t add to much in the way of saving. Not two trillion plus a year talked about.
Moving spend from one decision maker to another is not saving anything.
Already identified as relatively small - and risks global instability. You may not care about Ukraine’s future but pretty soon ditching places like Ukraine will come back to be an expensive problem for the US.
Tariffs will simply reduce trade and not pay for anything much. This will cause inflation.
Have a look at how much of an expensive mistake this has proved in the UK. This will cause bills to rise massively for ordinary people, create debt burdened companies that eventually need government bail out. It works for a few years then creates problems. In the UK the only sectors this worked in was telecomms and oil & gas. But even then they were sold off too cheaply to friends of the government.
De-regulation and loss of oversight / enforcement always (yes, always) leads to massively costly clean ups - paid for by the government. Whether this environment problems, health problems or financial problems. Lack of regulation inevitably means companies maximising profit by increasing risk (of something). Then that something happens.
So I have no doubt that you have replayed the DOP playbook on cost cutting almost to the letter. Its just that these are not wise decisions. Nor will they save trillions.
. It’s absurd and fear-mongering to say that Republicans don’t want to support the truly needy. It is, however, a broad but true stroke to say that Republicans don’t want to “take care” of people in needless poverty but rather “lift them out of it” - which, exactly what happened under the last Republican administration’s policies (pandemic assistance aside). In fact, Republicans are the ones who have always advocated for private donation through tax deductions that were slashed by Democrats.